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Kenya, China quietly strike deal on modern railway line

Saturday September 22 2012

Chinese-built railway line will carry freight trains at speeds of up to 80 kilometres per hour and passenger trains at up to 120 kilometres per hour. It will be completed in five years. Nation Media Group

In Summary

The railway line, which is to be built according to Chinese railway design standards, will carry freight trains at speeds of up to 80 kilometres per hour, and passenger trains at up to 120 kilometres per hour.

It will be completed in five years, with the cost of the track alone estimated at a massive $2.6 billion.

Away from the limelight, the Chinese construction company — China Roads and Bridges Company — has already signed a commercial contract with the Kenya Railways Corporation, under an arrangement that commits the state-owned company to deal only with the Chinese company.

The new deal will have far-reaching implications for the existing concession agreed to with Rift Valley Railway in both Uganda and Kenya.

The new plan is that the Chinese-built railway will be operated under an arrangement known as “open access,” where multiple operators will be allowed to operate freight businesses on the standard gauge railway system in competition with RVR.

Kenya and Uganda could find themselves in court battling it out with RVR over access to the new railway line. Kenya has stepped up diplomatic activity to include Uganda in its dealings with the Chinese and secure support for the new railway.

The rate at which Kenya is building up Chinese export credit in its loan book has sparked a debate within international lending circles, questioning whether the Chinese contractor-negotiated deals could lead to an unsustainable build-up in the country’s external debt portfolio.